The Core Difference
You reach higher gearing two different ways here. Stretch senior debt is one lender on a first charge advancing up to 90% of cost, rolled-up interest included; mezzanine finance is a second lender filling the gap behind a standard senior loan. Stretch senior suits smaller schemes and first higher-geared deals, where one lender is enough; add mezzanine only when one senior lender stops short of the gearing you need against end value.
You’re choosing a structure here, not a rate. Stretch senior keeps a single first charge and a single relationship, while mezzanine sits a second-charge lender behind the senior, and the two have to sign an inter-creditor agreement before any drawdown reaches the site. That agreement is the price of gearing past where one lender will go: the stack takes longer to arrange, and the extra rolled-up cost lands on your cash flow rather than the lender’s.
How the Two Structures Stack Up
You push gearing to a similar place by two different routes. Stretch senior reaches up to 90% of cost from one facility at Business Lending Development Funding (BLG), rolled-up interest included; mezzanine adds a second-charge tranche behind a standard senior loan to lift total debt past what that senior lender will advance.
Your harder limit is the one against end value, not against cost. BLG caps its stretch senior loan at 65% of Gross Development Value (GDV), or 75% once rolled-up interest is counted, and Maslow Capital lends 90% of cost but no more than 70% of GDV. Adding mezzanine lifts combined debt above that cap, which thins the room your cash flow keeps for a slow sale. That extra notch costs you a second charge, and the monitoring surveyor still signs off each stage before the next drawdown clears, now across two charges instead of one.
What Each One Costs
You pay for gearing in two very different shapes. Stretch senior charges one rate across the whole loan; mezzanine keeps the senior rate low on the bulk and prices its own tranche higher, because it ranks behind the senior lender if the scheme goes wrong. Neither comes with a published price list. BLG says its stretch senior rates are “negotiable based on the complexity and debt quantum of any individual project”, and Maslow goes as far as “margins from 3.8%”, which is a margin over a reference rate rather than the rate you will pay.
You can’t judge either route on its headline rate, because the two rates apply to different amounts of money. The mezzanine tranche is dear, but it sits on only the top part of the debt, so whether that blend beats one stretched rate comes down to the total finance cost against your own margin rather than to which number looks lower. Work both out in pounds over the life of the facility before you choose, because that total is what your cash flow actually pays.
When Stretch Senior Wins
You favour stretch senior when simplicity pays for itself. Stripping out the mezzanine layer removes a whole lender, legal pack and inter-creditor negotiation from the deal, and the gearing it buys is the reason anybody bothers: BLG contrasts the 60% of project costs it says a conventional bank will lend, leaving you to find 40% in cash, with the 90% its own stretch senior facility reaches.
You’re buying certainty of execution, and at the smaller end you have fewer lenders to be certain about. Of the two we checked, BLG lends from £1m to £15m and Maslow starts at £20m, so a £1.5m to £3m scheme is already choosing from a short list.
At that size simplicity is usually worth more than the last few points of gearing: one credit committee meets and clears the facility in a single sitting, one monitoring surveyor runs the drawdowns, the timetable stays predictable, and one facility closes instead of two being stitched together, so the first drawdown reaches your cash flow sooner. On a first deal at this level, that is usually the right trade.
When Mezzanine Wins
You reach for mezzanine when you need to push higher or blend cheaper. It fills the gap above what the senior lender will advance against end value, and on larger schemes the blended rate can undercut a single stretched rate.
Access matters as much as price at the top of the stack, where mezzanine is sometimes the only route up. When no stretch senior lender is active on your scheme type, a mezzanine fund behind a standard senior loan may be the only structure that reaches the gearing you need, and the second charge and inter-creditor agreement come with it. When the rest of the deal looks ready you can still be waiting on two lenders to settle those terms, and every week of that wait is a week your own cash flow is funding the site.
Mezzanine vs Stretch Senior FAQs
What is the difference between mezzanine finance and stretch senior debt?
Stretch senior debt is a single development loan from one lender on a first charge, advancing up to 90% of cost at lenders such as BLG, rolled-up interest included. Mezzanine finance is a separate second loan that sits behind a standard senior facility on a second charge, filling the gap up to the gearing you need. The core difference is structure: stretch senior is one lender and one charge, while mezzanine adds a second lender and an inter-creditor agreement between the two.
Which gives higher leverage, mezzanine or stretch senior?
Mezzanine reaches higher against end value. BLG publishes stretch senior at up to 90% of cost, rolled-up interest included, but caps it at 65% of gross development value, or 75% with that interest. A senior loan plus mezzanine can push combined debt past that cap. If you need to gear beyond what one senior lender will advance against end value, mezzanine is generally the route, because a single senior loan stops there.
Is mezzanine or stretch senior cheaper?
It depends on the blend. Stretch senior charges one rate across the whole facility, negotiated deal by deal. Mezzanine keeps the senior rate low on the bulk of the debt but prices its own tranche higher, because it ranks second. On some deals the low senior rate plus a small expensive mezzanine slice beats one stretched rate on everything; on others it loses. Model the total finance cost against your gross margin rather than comparing headline rates.
When should a developer choose stretch senior over mezzanine?
Stretch senior wins when simplicity and speed matter more than squeezing out the last few points of gearing: one lender, one legal pack, one monitoring surveyor and no inter-creditor negotiation. That makes it well suited to smaller schemes and first higher-geared deals. Mezzanine wins when you need to push past what one senior lender will advance, when the blended cost works out cheaper, or when no stretch senior lender is active on your scheme type or location.
How we compared mezzanine finance and stretch senior debt
What we covered. We compare two routes to higher development gearing in 2026: stretch senior debt from a single first-charge lender, and mezzanine behind a standard senior loan. We set out gearing limits, pricing, charge structure and when each fits.
Data sources. Lending limits were checked in October 2026 against specialist lender product pages, including BLG’s stretch senior terms and Maslow Capital’s development finance terms. Neither lender publishes an all-in monthly rate: BLG says its rates are negotiated per project, and Maslow publishes a margin rather than a rate, at “margins from 3.8%”. So this page quotes no monthly cost.
How we handle gaps. Where a lender publishes no figure, we say so rather than quote a broker’s estimate, and we flag that your terms depend on the scheme, the margin and your track record.
Update cadence. We re-verify this page at least monthly, and whenever market pricing moves. The verification date reflects the most recent full review. Some links on this page are affiliate links, see our editorial policy.
Regulatory note. This page is editorial content, not regulated financial advice. Development finance to a limited company or investor is generally unregulated lending, so compare facilities and read the terms before you sign.